CNA Reports Income Loss Of 290%; Gets $1.25B Cash Infusion

CNA Financial Corp. continued dismal third-quarter financial loss trends, reporting net income decreased 290 percent in the third quarter, and that it had secured a cash infusion of $1.25 billion from Lowes Corp.

The Chicago-based insurer reported third-quarter net income dropped $505 million from the comparative quarter to a loss of $331 million, translating into a loss per share of $1.23. The company reported revenues decreased 33 percent, or $825 million, to $1.66 billion in the period. The combined ratio in the quarter grew 3.6 points to 114.1.

For the first nine months, net income dropped 95 percent, or $650 million, to $37 million, or 14 cents a share. Revenues for the period compared to last year dropped 16 percent, or $1.2 billion, to $6.3 billion. The nine-month combined ratio increased 3.6 points to 110.3.

The third-quarter results were affected by $168 million in after-tax catastrophe losses. The quarter also included a number of investment loss items, with an increase in net realized investment losses of $385 million from the prior year.

CNA said it would issue $1.25 billion of preferred stock to the Loews Corp., with a dividend rate of 10 percent for the first five years, of which $1 billion will be used to support statutory capital. The remaining $250 million will go to the holding company to support financial flexiblity. Because of this, the company is suspending dividend payments on common stock until the preferred is paid in full.

During an analyst's conference call, Stephen W. Lilienthal, chairman and chief executive officer, said the move was made to position CNA to withstand the current financial stress the markets are suffering.

Mr. Lilienthal also announced that Thomas F. Motamed will take over his position upon his retirement on Jan. 1.

Late today, insurance rating service A.M. Best said the "A" insurance financial strength rating on CNA would remain unchanged.

(This story was updated at 4:57 p.m.)

Comments

Resource Center

View All »

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.